Fringe benefits tax (FBT) within the system of
taxation in New Zealand
Taxes in New Zealand are collected at a national level by the Inland Revenue Department (IRD) on behalf of the Government of New Zealand. National taxes are levied on personal and business income, and on the supply of goods and services. Capit ...
is the tax applied to most, although not all,
fringe benefits
Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries. Insta ...
("
perks"), including the ones provided through someone other than an employer. FBT is paid to
Inland Revenue
The Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation ta ...
by the employer and is calculated with reference to the taxable value of the benefit provided to the employee or
associate.
Legislation
Legislation governing what a fringe benefit is, and is not, is contained within part CX of the Income Tax Act 2007. The imposition of FBT is contained within part RD of the Income Tax Act 2007.
The categories of benefits include motor vehicles, low-interest loans, free, subsidised or discounted goods and services, employer contributions to funds, insurance and
superannuation
A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...
schemes and other benefits.
Paying FBT
FBT filing may be quarterly, finance year, or annual
tax return
A tax return is the completion of documentation that calculates an entity or individual's income earned and the amount of taxes to be paid to the government or government organizations or, potentially, back to the taxpayer.
Taxation is one of ...
s. Taxpayers must pay quarterly unless they qualify for, and have elected to, use another period for filing.
Since 1 April 2001, FBT has been payable using one of two options. The Single Rate Option (whereby FBT is paid at the highest FBT rate on all employees), or the ''alternate rate option'' (formerly the ''multi-rate option'', which involves attribution of benefits to individual employees and pooling of non-attributable benefits and certain de minimis benefits). There is a 'short form' way of calculating under the alternate rate option, which is simply to pool non-attributable and de minimis benefits but pay the highest rate of FBT on remaining benefits rather than attribute to employees.
New Zealand FBT rates are determined by grossing up personal income tax rates. As such, FBT rates are updated when personal income tax rates are changed.
2011 FBT (1 April 2010 – 31 March 2011)
Due to a change in income tax rates from 1 October 2010 (mid tax year), the FBT rates for 2011 are blended for the year.
* Single rate option – 61% for Q1-Q2, 49.25% for Q3-Q4
* Alternate rate option – 49% or 61% for Q1-Q2, 43% or 49% for Q3, Alternate rate calculation in Q4
* Alternate rate option pooling – 45.99% for employee pool and 55.04% for shareholder pool
2010 FBT (1 April 2009 – 31 March 2010)
* Single rate option – 61% for all quarters
[{{cite web, title=2011 FBT rates, url=http://www.7g.co.nz/fbt-rates-2010/, accessdate=17 April 2011, archive-url=https://web.archive.org/web/20110903004240/http://www.7g.co.nz/fbt-rates-2010/, archive-date=3 September 2011, url-status=dead]
* Alternate rate option – 49% or 61% for Q1-Q3, Alternate rate calculation in Q4
* Alternate rate option pooling – 49% for employee pool and 61% for shareholder pool
Prior years
As of 2006, there are three methods of rate calculation for FBT: flat rate (64%), multi-rate and short form multi-rate options. .
References
External links
Inland Revenue Department: FBT
Taxation in New Zealand
Employee benefits